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Cosmo contributed land with a fair market value of $365,000 and a tax basis of $99,000 to the Y Mountain partnership in exchange for a 30 percent profits and capital interest in the partnership. The land is secured by $161,000 of nonrecourse debt. Other than this nonrecourse debt, Y Mountain partnership does not have any debt. a. How much gain will Cosmo recognize from the contribution? b. What is Cosmo's tax basis in his partnership interest?

Cosmo contributed land with a fair market value of $365,000 and a tax basis of $99,000 to the Y Mountain partnership in exchange for a 30 percent profits and capital interest in the partnership. The land is secured by $161,000 of nonrecourse debt. Other than this nonrecourse debt, Y Mountain partnership does not have any debt. a. How much gain will Cosmo recognize from the contribution? b. What is Cosmo's tax basis in his partnership interest?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cosmo contributed land with a fair market value of $365,000 and a tax basis of $99,000 to the Y Mountain partnership in exchange for a 30 percent profits and capital interest in the partnership. The land is secured by $161,000 of nonrecourse debt. Other than this nonrecourse debt, Y Mountain partnership does not have any debt. a. How much gain will Cosmo recognize from the contribution? b. What is Cosmo's tax basis in his partnership interest?
Transcribed Image Text:Cosmo contributed land with a fair market value of $365,000 and a tax basis of $99,000 to the Y Mountain partnership in exchange for a 30 percent profits and capital interest in the partnership. The land is secured by $161,000 of nonrecourse debt. Other than this nonrecourse debt, Y Mountain partnership does not have any debt. a. How much gain will Cosmo recognize from the contribution? b. What is Cosmo's tax basis in his partnership interest?
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